Technology has made it much easier for businesses to operate on a global scale. Whether you’re just starting out as an entrepreneur or have been in business for a long time, you will probably have to deal with some form of tech at some point. Outsourcing core business processes comes with its own set of upsides and downsides, which is why it’s important for business owners to understand the benefits and drawbacks before making any final decisions on the matter.
What is Outsourcing?
Outsourcing is the practice of transferring certain business processes to outside suppliers. This can help companies save costs and increase efficiency by focusing on their core competencies while offloading non-core tasks to specialists. When you outsource, you’re hiring someone outside of your company — often a company or an individual located in another country — to perform a specific task. Outsourcing is a popular trend among IT businesses to hire someone who specialises in a certain field.
4 reasons why you should consider outsourcing your core business processes
Reduced Costs: With outsourcing, you don’t have to hire a full-time employee to manage and maintain yourIT systems. Instead, you can hire a company to do it on a per-job basis. This way, you only pay for what you need and don’t have to pay for benefits or a full-time salary.
A Variety of Expertise: When you outsource, you have access to professionals who have years of experience in a specific field. For example, you can find companies that specialise in IT infrastructure management and use them to help you create a robust and reliable system.
Flexibility: Outsourcing allows you to scale back or ramp up your contracts whenever necessary. Often, outsourcing companies offer short-term contracts that allow you to work with the flexibility to change your needs at any given time.
Expert Insight: If you don’t have in-house experts who can provide advice and recommendations, outsourcing is a great way to get expert insight.
There are drawbacks of outsourcing as well. When you outsource, you have to go outside of your company to find experts. However, when you bring in outside companies or individuals, you lose the ability to build real and meaningful relationships. It’s important for business owners to maintain a level of empathy for their customers. Outsourcing also means giving up control over the systems that you’re using. You don’t have any control over the infrastructure that you’ve hired someone to manage. You don’t have any control over the systems that are used to host your data. You don’t have any control over the people who are working inside of your organisation. Unfortunately, outsourcing comes with a high degree of uncertainty. It’s almost impossible to predict how much you’ll pay for outsourcing services. You don’t know how long your projects will take or how much they’ll cost. You don’t know if you’ll be able to find a company that’s willing to work with your budget.
HMRC and tax implications of outsourcing:
Outsourcing is seen very carefully by HMRC in terms of IR35 and employed / self-employed scenario. If the contractor is under IR35, the contractor will be deemed as an employee of the company. HMRC has suggested a to0l which could be helpful to decide the employed / self-employed status of an individual.
Final Thoughts:
The world has become more and more connected, and it has never been easier to outsource your business’s IT needs. Technology makes it possible to hire experts from around the world and have them manage your data and systems without ever having to meet in person. Technology is also making it easier to hire experts from countries where the cost of living is lower than in the UK. There are a lot of advantages to outsourcing. While outsourcing has its benefits, it also comes with some drawbacks. It can be harder to develop real relationships with outsourced experts. Furthermore, the costs can be unpredictable, and it may be
difficult to hire people from countries where living costs are lower.
